Union Bank carves out mid-corporate segment for lending

Union Bank of India has carved out a mid-corporate banking vertical from the micro, small and medium enterprises (MSME) banking vertical to give focussed attention to the credit requirements of companies with a turnover of Rs 100-500 crore.

The restructuring, which was carried out last month, entailed transfer of loans aggregating Rs 15,000 crore to the newly created mid-corporate vertical from the MSME vertical or line of business.

The public sector bank's MSME vertical now handles loan proposals from enterprises with a turnover of less than Rs 100 crore.

New Head

Post the inter-vertical transfer of loans, the MSME vertical has a loan portfolio of about Rs 45,000 crore.

The bank has appointed Mr S.K. Sangar, General Manager, as the Head of mid-corporate banking.

About 20 large branches across the country will be re-designated as mid-corporate branches.

Better yield

The attractiveness of lending to mid-sized companies is that they fetch better yield, about 12-13 per cent.

In contrast, large companies typically want loans either at a bank's benchmark lending rate, which currently averages around 10.75 per cent across the banking sector, or at a minimum spread over this rate.

“Good banking is all about minimising and diversifying risks. So, we are doing this through the mid-corporate vertical,” said the official.

The bank's large corporate banking vertical has also undergone restructuring.

Last year, this department was split into two segments — origination and sanction/disbursement — with each headed by a general manager.

Now, these two segments have been merged so that the bank can have a holistic approach to loan origination and disbursement.

The large corporate vertical handles loan proposals from companies with a turnover of over Rs 500 crore.

This vertical has a loan portfolio of about Rs 45,000 crore.